Five Minute Levy Guide
Separate the facts from the fiction and easily understand the Apprenticeship Levy. Our simple guide will help you get to grips with Levy calculations, payment methods, eligibility and tips on how to access your training funds.
What we’ll cover
Why the Levy has been introduced
Paying into the Levy
Accessing Levy funds from your Apprenticeship Service Account
Support from Solvo Vir
Apprenticeship Levy Key Facts
- The Apprenticeship Levy celebrated its first birthday in April 2018
- Around 2% of employers in England are obligated to pay the Apprenticeship Levy
- Recent changes mean that Levy-paying employers can make transfers of up to 10%
- The option to pass on a portion of the Levy allows companies to support training in smaller companies, perhaps within their supply chain, to help them fund apprenticeships
- Businesses pay the Levy to HM Revenue and Customs (HMRC) through the Pay as You Earn (PAYE) process
- All businesses with an annual PAYE bill above £3m are required to pay the Levy
- Any business paying into the Levy will be given an allowance of £15,000 per tax year to offset against any Levy payment made
- Levy-paying employers who take on apprentices will receive further offsets in the form of monthly top-ups. For every £1 spent on training an apprentice, the government will apply a further 10% top up. This gives the value of £1.10 for every £1
- Businesses with an annual wage bill less than £3m are still able to access subsidised apprenticeship training under different funding rules. They can also choose to register for the Levy scheme to benefit from the 10% top up payment
- Funds available via the Apprenticeship Levy scheme only apply to English apprenticeships. Scotland, Wales and Northern Ireland operate their own apprenticeship programmes
- As of January 2017, employers have had the opportunity to register for an online account and use this to pay for apprenticeship training
- The development of apprenticeship standards is overseen by a new government body, The Institute for Apprenticeships.
Why has the Levy been introduced?
The Apprenticeship Levy was introduced in April 2017 with the objective to drive three million new apprenticeship starts by 2020. Alongside this boost in numbers, ‘The Trailblazer Initiative’ has also been working towards improving the quality of apprenticeship standards. The intention of this is to increase the subsequent uptake from employers.
The Levy gives employers more control over where and how money is spent on employee training, such as apprenticeships. It is applicable to employers in the UK with a PAYE bill (pay as you earn) of more than £3m per year These employers will be charged a Levy of 0.5% of their full UK payroll.
The Levy offers a way to raise the quality of apprenticeships throughout England and also increase the number of total apprentices. It is structured for the benefit of the employer; meaning that employers who offer apprenticeships and employee training opportunities can get more out than they put in.
Paying into the Levy
All employers with an annual PAYE bill of £3m are required to pay the Apprenticeship Levy. But what these employers are required to pay will be based on the total amount of earnings subject to Class 1 secondary NICs. Earnings include any employment remuneration or profit that an employer pays NICs on, such as: wages, bonuses, commissions, and pension contributions.
In order to quickly calculate your Levy contribution, visit our Apprenticeship Levy Calculator.
Put simply, employers pay the Levy on their entire PAYE bill at a rate of 0.5%. However, there is a Levy allowance to offset against this. The Levy allowance is worth £15,000 for each tax year.
Supporting employers that don’t pay the Levy
Non-Levy paying employers have the opportunity to negotiate and agree a price with their training provider. The agreed price will cover the delivery of apprenticeship training towards a specific standard, as well as the cost of assessment at the end of the training period. The payment will be covered through a co-investment with the government.
Support from Solvo Vir
Solvo Vir delivers apprenticeship training throughout England in key, cross-industry specialisms; including recruitment, leadership & management and accountancy. We provide training on-site and online, enabling employees to develop and learn new skills, whilst still undertaking their usual responsibilities.
As part of our service to employers, Solvo Vir also offers an Apprenticeship Levy consultation process. We understand that the Apprenticeship Levy can appear to be a complicated process, which is why we strive to take the hard work out of the Levy, guiding employers through the required paperwork and calculations.
If you’d like to arrange a Levy consultation with our expert team, contact Solvo Vir today on 0330 0539140. We will guide you through the Levy process, help you work out your monthly contributions, and discuss training options for your employees.